American, JetBlue surprise airline industry with plans for new alliance

Jul 17, 2020

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American and JetBlue are forming an “alliance” in the U.S. Northeast that promises to shake up competition in two of the region’s biggest travel markets.

The carriers say they will introduce a codeshare partnership that would include routes from New York and Boston and as-of-yet unspecified “loyalty benefits” for members of the airlines’ frequent flyer programs.

American and JetBlue say the partnership would give travelers “seamless connections” on routes covered by the pact and allow the airlines to collectively expand their presence across Boston (BOS) and the three big New York City airports – JFK, Newark (EWR) and LaGuardia (LGA).

Underscoring that, American says it plans to launch nonstop service from its JFK hub to Tel Aviv (TLV) and Athens (ATH) “upon implementation of the alliance agreement,” which would allow JetBlue to help feed those new international flights from JFK. Additionally, American said it also plans to bring back seasonal service between JFK and Rio de Janeiro (GIG) in winter 2021.

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The deal follows a previous frequent-flyer pact between American and JetBlue that lasted for four years before ending in 2014 after American merged with US Airways. But the latest iteration comes amid a global pandemic and after American has been pulling back on New York flights for years amid intense competition. Now, the partnership will allow it reassert itself in the country’s economic center. American can fill its lucrative international flights without investing to expand its network of domestic routes at JFK beyond what the local market can support. That will let it better compete with Delta and United, which have been stealing away corporate contracts that lead to the best profits.

For its part, JetBlue also pledged to expand as part of the pact, saying it would add more flights at Newark and LaGuardia while further growing its presence at JFK – already the carrier’s busiest hub. It was not immediately clear how JetBlue might secure the slots it would need to expand at LaGuardia or if it would move operations out of the Marine Air Terminal if it is to expand there.

In the proposed codeshare, American customers would gain access to 130 new JetBlue routes from the Boston and New York City-area airports, while JetBlue’s would gain access to 60 American Airlines-operated routes. The carriers pledged “new benefits” for loyalty members, but offered no details. It’s thought that the deal will include at least some reciprocal earning of redeemable points and miles, though it was unclear if the pact might eventually include the ability to redeem miles or earn elite-status credit on the other airline.

The proposed tie-up between American and JetBlue, which still must be OK’d by U.S. regulators, is an attempt by the airlines to bolster their standing in the competitive Northeast. It also comes as they and all other U.S. carriers try to navigate the crushing blow to air travel levied by the coronavirus pandemic. Airlines are losing millions of dollars a day as travelers stay home and those with existing reservations cancel flights and ask for refunds. In June, American said it was losing about $40 million a day, though that was an improvement from the $100 million it was losing daily in April, according to the Financial Times. Similarly, carriers have warned of job cuts in the tens of thousands and are trying to convince a nervous public that it’s safe to fly.

DALLAS, TEXAS - DECEMBER 12, 2018: An American Airlines Boeing 777 (Oneworld livery) passenger jet taxis after landing at Dallas/Fort Worth International Airport which serves the Dallas/Fort Worth, Texas, metroplex area in Texas. Oneworld is a alliance of airlines designed to serve frequent international travelers. (Photo by Robert Alexander/Getty Images)
(Photo by Robert Alexander/Getty Images)

Previously: American drops 19 long-haul routes; cuts in LAX, adds in Seattle

Against that backdrop, the companies touted the pact as something that would both enhance their standing in the Northeast and “accelerate each airline’s recovery as the travel industry adapts to new trends as a result of the pandemic.”

“Pairing JetBlue’s domestic network with American’s international route map creates a new competitive choice in the Northeast, where customers are longing for an alternative to the dominant network carriers,” JetBlue president Joanna Geraghty said in a statement announcing the pact, which she described as “the next step in our plan to accelerate our coronavirus recovery … and fuel JetBlue’s growth into the future.”

For American, the pact with JetBlue is the latest aggressive move from the carrier.

More: Alaska Airlines accelerates Oneworld plans with aim to join by year end

In February, American announced a West Coast-focused alliance with Seattle-based Alaska Airlines that would mirror what it’s doing with JetBlue in the Northeast. That partnership also includes reciprocal frequent flyer benefits and plans for Alaska to help feed new international long-haul flights that American intends to fly from Seattle.

That tie-up also calls for Alaska Airlines to join the Oneworld alliance that includes American, but nothing like that is at play in the deal with JetBlue. The carriers were clear that JetBlue would neither join Oneworld nor seek to be included in American’s transatlantic joint venture with British Airways parent IAG.

Further, JetBlue said that it would continue “independently” with its previously stated plans to launch service to London sometime next year.

Still, London is just part of JetBlue’s ambitious plan to expand to international service. So far, space and government limitations in New York and Boston have prevented it from doing so. But since its inception two decades ago, the New York-based airline has partnered with a host of different carriers to help fill its planes. While this the American pact potentially its biggest — and most visible — deal, it follows a long pattern for JetBlue.

Domestically, American and JetBlue touted their premium seats from the Northeast that would be covered under their alliance.

JetBlue offers its Mint lie-flat seats on high-profile routes from JFK, and recently announced plans to bring that product to Newark, where its Mint product will challenge United’s premium offering on flights to Los Angeles (LAX) and San Francisco (SFO). American also offers its own high-end option from JFK, flying its premium-heavy Airbus A321T aircraft that offer international-style first and business class on routes to LAX and San Francisco.

Additionally, American said beginning in 2021, it plans to shift more of its short-haul flying from single-class regional jets to ones outfitted with both first class and economy.

Contributing: Scott Mayerowitz, TPG.

Featured photo by Airbus

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